XOM's Integrated Business Model Shields Earnings Amid Lower Oil Prices
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Exxon Mobil Corporation XOM, the integrated energy giant, has recently warned that its upstream earnings are expected to have been weighed down sequentially due to lower liquids prices. According to data from the U.S. Energy Information Administration, the West Texas Intermediate spot average is expected to drop from $65.78 per barrel in the third quarter to an estimated $59.31 per barrel in the fourth quarter.However, the integrated nature of the company allows it to capitalize on the softness in crude prices through its refining operations. Lower crude prices imply cheaper feedstock for XOM’s refineries, which supports refining gains. This acts as a cushion to sustain the company’s profitability when its upstream business is affected by lower liquids prices. In fact, XOM has forecasted that changes in industry margins are expected to have a positive impact of $300-$700 million on the Energy Products segment and up to $200 million on the Specialty Products segment on a sequential basis.The integrated business model shields ExxonMobil’s earnings by supporting downstream profitability and partially offsetting the negative impact on its upstream earnings. XOM’s diversification should help it stabilize earnings during a volatile commodity price environment. CVX and BP: Two Leading Integrated Energy MajorsChevron Corporation CVX and BP plc BP are two other global integrated energy firms. The two companies are involved in both the upstream and downstream segments of the oil and gas business. This allows them to stabilize earnings and sustain profitability even in challenging commodity pricing environments.XOM’s Price Performance, Valuation & EstimatesShares of ExxonMobil have risen 15.4% over the past year compared with the 9.2% increase of the composite stocks belonging to the industry. Image Source: Zacks Investment ResearchFrom a valuation standpoint, XOM trades at a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 7.97X. This is above the broader industry average of 4.91X.Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for XOM’s 2025 earnings has seen upward revisions over the past 30 days.Image Source: Zacks Investment ResearchXOM, CVX and BP each currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Free Report: Profiting from the 2nd Wave of AI ExplosionThe next phase of the AI explosion is poised to create significant wealth for investors, especially those who get in early. It will add literally trillion of dollars to the economy and revolutionize nearly every part of our lives.Investors who bought shares like Nvidia at the right time have had a shot at huge gains.But the rocket ride in the "first wave" of AI stocks may soon come to an end. The sharp upward trajectory of these stocks will begin to level off, leaving exponential growth to a new wave of cutting-edge companies.Zacks' AI Boom 2.0: The Second Wave report reveals 4 under-the-radar companies that may soon be shining stars of AI’s next leap forward.Access AI Boom 2.0 now, absolutely free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BP p.l.c. (BP): Free Stock Analysis Report Chevron Corporation (CVX): Free Stock Analysis Report Exxon Mobil Corporation (XOM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks
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